Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Stock Code: 600690 Short Name: Qingdao Haier Third Quarterly Report of 2017 Qingdao Haier Co., Ltd Stock Code: 600690 INTELLIGENCE CREATES SMART LIFE 1 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Contents I. Important Notice ......................................................................................................................... 3 II. Company Profile ......................................................................................................................... 3 III. Important Events ......................................................................................................................... 8 IV. Appendix .....................................................................................................................................18 2 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. I. Important Notice 1.1 The Board of Directors, the Board of Supervisors and directors, supervisors and senior management of Qingdao Haier Co., Ltd. (the “Company”) hereby assure that the content set out in the quarterly report is true, accurate and complete, and free from any false record, misleading representation or material omission, and are individually and collectively responsible for the content set out therein. 1.2 All directors of the Company have attended the Board meeting to consider and approve the quarterly report. 1.3 Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of the Company) and Ying Ke (the person in charge of accounting department) hereby certify that the financial statement set out in the quarterly report is true, accurate and complete. 1.4 Third quarterly report of the Company has not been audited. II. Company Profile 2.1 Major financial information Unit and Currency: RMB At the end of last year Increase/dec rease at the end of the reporting As at the end of the period reporting period After adjustment Before adjustment compared with the end of last year (%) Total assets 144,448,659,020.58 131,469,157,348.79 131,255,290,325.24 9.87 Net assets attributable to 30,205,038,353.20 26,438,188,226.56 26,364,725,409.83 14.25 shareholders of 3 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. listed companies As at the beginning of last year to the end of Increase/dec the reporting period of last year rease for the As at the beginning (January to September) period of the year to the compared end of the reporting with the period correspondi (January to After adjustment Before adjustment ng period of September) last year (%) Net cash flows from operating 14,160,052,998.94 4,945,944,554.94 4,934,382,297.60 186.30 activities As at the beginning of last year to the end of Increase/dec the reporting period of last year rease for the As at the beginning (January to September) period of the year to the compared end of the reporting with the period correspondi (January to After adjustment Before adjustment ng period of September) last year (%) Operating 119,189,613,634.20 84,367,342,584.55 84,270,593,385.38 41.27 revenue Net profits attributable to 5,682,361,717.64 3,826,984,146.82 3,823,106,782.95 48.48 shareholders of listed companies Net profits attributable to shareholders of listed companies 4,695,336,406.07 3,548,735,043.47 3,548,735,043.47 32.31 with non-recurring gain and loss deducted Weighted Increased average return on 19.51 15.76 15.79 3.75% equity (%) Basic earnings per share (RMB 0.932 0.627 0.627 48.64 per share) Diluted earnings per share (RMB 0.932 0.627 0.627 48.64 per share) 4 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Notes: 1. From January to September 2017, the Company’s revenue increased by 41% compared to the corresponding period of last year, among which, revenue from refrigerator and freezer business increased by 34%, revenue from washing machine business increased by 41%, revenue from air conditioner business increased by 61% and revenue from kitchen products increased by 76%. 2. From January to September 2017, revenue from the original business of the Company (excluding GEA) increased by 22%, and net profit attributable to the Parent Company with non-recurring gain and loss deducted increased by 22%. 3. The domestic market focuses on retail transformation, efficiency optimization and structure upgrading. Revenue from domestic white appliances increased by 26% from January to September 2017; high-end brand Casarte continues to grow rapidly with an increase of 41% in the first three quarters, maintaining the absolute leading position in the high-end market. 4. The overseas market carries forward multi-brand and “R&D, manufacturing and marketing” integrated layout, realizing comprehensive development. From January to September 2017, the overall overseas revenue amounted to RMB50.74 billion, representing 43% of the total revenue, and approximately 100% of the revenue from self-owned brand: ①From January to September 2017, GEA’s contribution to revenue amounted to RMB34.2 billion, contribution to the net profit attributable to the Parent Company amounted to RMB1.88 billion and contribution to net profits attributable to shareholders of listed companies with non-recurring gain and loss deducted amounted to RMB1.02 billion. Among which the third quarter alone recorded revenue of RMB11.7 billion, representing an increase of 7.7% compared with the corresponding period of last year. ②Revenue from original overseas business (excluding GEA) increased by 20%, among which revenue from the South-Asian market increased by 49%, revenue from the European market increased by 29%, revenue from the Middle-Eastern and African market increased by 29% and revenue from the Australian market increased by 19%. 5. U+ SmartLife platform focuses on intellectualization and user experience upgrading, accelerating the pace of product intellectualization, and continuing the iteration of the U+ Home OS system. The sale of white internet appliances (smart appliances) for the first three quarters amounted to 8.4 million units, representing an increase of 222%. U+ platform users amounted to 50 million, representing an increase of 102%, compared with the corresponding period of last year. 6. Carrying forward the construction of COSMOPlat Industrial Internet Platform and promoting the transformation of digital enterprises, mass customization of appliances amounted to 7.14 million units, representing an increase of 870%. 5 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 7. The community economic ecological platform of “Shunguang micro-store, online store, offline store”, achieved 0.61 million Shunguang micro-store owners, 16,000 OTO stores and 20,000 communities on the Platform, with GMV (Gross Merchandise Volume) amounting to over RMB3 billion from January to September 2017. Non-recurring Profit or Loss Items and Amount √Applicable □ Not Applicable Unit and Currency: RMB Amount from the Amount of current beginning of the Items period year to the end of the (July-September) reporting period (January-September) Losses and profits from disposal of non-current assets 3,444,050.08 24,463,313.86 Government grants included in current profit or loss, except that closely related to the normal operating business, complied with requirements of the national 108,768,137.25 226,840,920.22 policies, continued to be granted with the amount and quantity determined under certain standards Current net profit or loss of the subsidiaries from the consolidation of enterprises under common control from 500,041.82 500,041.82 the beginning of the period to the date of the mergers In addition to the effective hedging business related to the normal operations of the Company, profit or loss of changes in fair value arising from holding of trading financial assets and trading financial liabilities, as well as 153,656,077.48 579,570,227.47 investment gain realized from disposal of trading financial assets, trading financial liabilities and financial assets available for sale Other non-operating income and expenses except the 223,550,616.45 386,393,769.38 aforementioned items Minority interests (after tax) -29,605,242.68 -100,022,424.36 Income tax effect -123,017,318.39 -130,720,536.82 Total 337,296,362.01 987,025,311.57 2.2 Total number of shareholders, top 10 shareholders and top 10 shareholders holding circulating shares (or shareholders not subject to trading restrictions) as of the end of the reporting period Unit: Share Total number of shareholders 138,077 Shareholdings of top ten shareholders 6 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Number of Status of shares shares Number of Nature held pledged Name of shares held Percenta of subject or frozen Shareholder (full name) at the end of ge (%) shareholde to selling Nu the period r restriction Status mb s er Domestic non-state- Haier Electric Appliances 1,258,684,824 20.64 Nil owned International Co., Ltd. legal entity Domestic non-state- Haier Group Corporation 1,072,610,764 17.59 Nil owned legal entity Foreign KKR HOME 605,985,988 9.94 Nil legal INVESTMENT S.A R.L. entity Hong Kong Securities Unknown 460,096,580 7.55 Unknown Clearing Co., Ltd. China Securities Finance Unknown 229,914,866 3.77 Unknown Corporation Limited Domestic Qingdao Haier Venture & non-state- Investment Information 172,252,560 2.83 Nil owned Co., Ltd.(青岛海尔创业投 legal 资咨询有限公司) entity National social security Unknown Unknown 106,888,894 1.75 fund, Portfolio 104 GIC PRIVATE LIMITED 77,187,435 1.27 Unknown Unknown Central Huijin Asset Unknown Unknown 69,539,900 1.14 Management Ltd. National social security Unknown Unknown 40,027,881 0.66 fund, Portfolio 103 Shareholdings of top ten shareholders not subject to selling restrictions Number of Class and number of shares shares held Name of shareholder subject Class Number to no selling restrictions 7 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Haier Electric Appliances International Co., 1,258,684,824 1,258,684,824 RMB ordinary Ltd. Haier Group Corporation 1,072,610,764 RMB ordinary 1,072,610,764 KKR HOME INVESTMENT S.A R.L. 605,985,988 RMB ordinary 605,985,988 Hong Kong Securities Clearing Co., Ltd. 460,096,580 RMB ordinary 460,096,580 China Securities Finance Corporation RMB ordinary 229,914,866 229,914,866 Limited Qingdao Haier Venture & Investment RMB ordinary 172,252,560 Information Co., Ltd.(青岛海尔创业投资咨 172,252,560 询有限公司) National social security fund, Portfolio 104 106,888,894 RMB ordinary 106,888,894 GIC PRIVATE LIMITED 77,187,435 RMB ordinary 77,187,435 Central Huijin Asset Management Ltd. 69,539,900 RMB ordinary 69,539,900 National social security fund, Portfolio 103 40,027,881 RMB ordinary 40,027,881 (1) Haier Electric Appliances International Co., Ltd. is a holding subsidiary of Haier Group Corporation. Haier Group Corporation holds 51.20% of its equity. Qingdao Related-parties or parties acting in concert Haier Venture & Investment Information Co., Ltd.(青岛 among the aforesaid shareholders 海尔创业投资咨询有限公司) is a party acting in concert with Haier Group Corporation; (2) The Company is not aware of the existence of any connections of other shareholders. Description of preferential shareholders with restoration of voting rights and their N/A shareholdings 2.3 Total number of preferential shareholders, top ten preferential shareholders and top ten holders of preference shares not subject to trading moratorium as of the end of the reporting period □Applicable √ Not Applicable III. Important Events 3.1 The major changes and reasons for the items of accounting statement and financial indicators √Applicable □Not Applicable 1) Monetary capital increased by 36.38% as compared with the beginning of the period, which was mainly due to the fact that the net cash flows from operating activities in the period has increased; 8 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 2) Financial assets measured at fair value and its changes of which included in current profit or loss decreased by 71.28% as compared with the beginning of the period, which was mainly attributable to the influence of change in fair value of derivative financial instruments such as forward contracts; 3) Interests receivable increased by 46.17% as compared with the beginning of the period, which was mainly due to the fact that the interests of the financial products which have not yet been received recognized at the end of the period have increased; 4) Dividends receivable decreased by 95.55% as compared with the beginning of the period, which was mainly attributable to the dividend which had been declared but not yet received from the joint stock companies; 5) Other current assets increased by 31.42% as compared with the beginning of the period, which was mainly attributable to the addition of financial products for the period; 6) Long-term prepaid expenses decreased by 30.40% as compared with the beginning of the period, which was mainly attributable to the amortization of the current expenses; 7) Short-term borrowings decreased by 31.63% as compared with the beginning of the period, which was mainly attributable to the adjustment from part of short-term borrowings to long-term borrowings due to the fact that the Company had adjusted the borrowing structure; 8) Financial liabilities measured at fair value and changes of which included in current profit and loss decreased by 52.42% as compared with the beginning of the period, which was mainly attributable to the change in fair value of derivative financial instruments such as forward contract for the period; 9) Interests payable increased by 551.93% as compared with the beginning of the period, which was mainly attributable to the increase of interests which has been accrued but not yet paid; 10) Non-current liabilities due within one year decreased by 44.07% as compared with the beginning of the period, which was mainly due to the conversion of convertible bonds issued in previous years into shares in the period by subsidiaries of the Company; 11) Estimated liabilities increased by 39.91% as compared with the beginning of the period, which was mainly due to the fact that contingent liabilities recognized as the investments with buy-back conditions which were absorbed by subsidiaries of the Company; 9 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 12) Other non-current liabilities decreased by 72.58% as compared with the beginning of the period, which was mainly attributable to the change in fair value of forward contract due over one year which was held by the Company in the period; 13) Treasury stock decreased by 100% as compared with the beginning of the year, which was mainly attributable to the cancellation of the treasury stock in the period; 14) Other comprehensive income decreased by 52.69% as compared with the beginning of the period, which was mainly attributable to the decrease of the share of other comprehensive income which will be reclassified in profit and loss in the future; 15) Operating revenue increased by 41.27% as compared with the corresponding period of last year, which was mainly attributable to the growth of the original business of the Company and the contribution of GEA; 16) Operating expense increased by 39.61% as compared with the corresponding period of last year, which was mainly attributable to the increase of expenses resulting from the growth of sales; 17) Taxes and surtaxes increased by 112.87% as compared with the corresponding period of last year, which was mainly attributable to the consolidation of all relevant taxes during the course of operating activities into the accounting item of taxes and surcharge since 1 May 2016 according to the CAIKUAI No. [2016]22 Value Added Tax Accounting Treatment Regulations issued by the MOF; 18) Selling expenses increased by 57.31% as compared with the corresponding period of last year, which was mainly attributable to the inclusion of selling expenses of GEA (the corresponding period only included the selling expenses of GEA during the period from 6 June to 30 September 2016); 19) Financial expenses increased by 266.86% as compared with the corresponding period of last year, which was mainly attributable to the increase of average balance of borrowings for the period as compared with the corresponding period of last year; 20) Loss in assets impairment increased by 37.01% as compared with the corresponding period of last year, which was mainly attributable to the increase of closing balance of account receivables; 21) Income from change in fair value increased by 608.13% as compared with the corresponding period of last year, which was mainly attributable to the change in fair value of derivative financial instruments such as forward contracts for the period; 10 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 22) Other income increased by 100% as compared with the corresponding period of last year, which was mainly attributable to the implementation of the Accounting Standards for Business Enterprises No. 16 - Government grants (2017 Revision) at the time as requested by the MOF during the period; 23) Non-operating expenses decreased by 57.48% as compared with the corresponding period of last year, which was mainly attributable to the higher one off expense which was incurred from the acquisition of GEA in the corresponding period of last year and there was no such factor in the current period; 24) Net cash flows from operating activities increased by 186.30% as compared with the corresponding period of last year, which was mainly due to the increase of revenue for the period and the strengthening of management of supply chain; 25) Net cash flows from investing activities increased by 87.64% as compared with the corresponding period of last year, which was mainly attributable to the higher payment for the acquisition of GEA in the corresponding period of last year; 26) Net cash flows from financing activities decreased by 103.06% as compared with the corresponding period of last year, which was mainly attributable to the substantial debt financing used for the acquisition of GEA in the corresponding period of last year. 3.2 Note and analysis on the progress of significant events and their impact and solution √ Applicable □Not Applicable (1) As of the end of the reporting period, the external guarantees of the Company and its subsidiaries are all guarantees among the Company and its subsidiaries, and the balance of the external guarantees amounted to RMB23.757 billion, representing 78.7% of the net assets of the Company for the latest period, and 16.4% of the total assets for the latest period. (2) As of the end of the reporting period, the balance of the Company’s exchange transactions of derivative products amounted to approximately US$2.9 billion. 11 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 3.3 The undertakings that have been past due and not been completed during the reporting period. □Applicable √Not applicable During the reporting period, the Company has no undertakings that have past due but not performed. The undertakings made by the actual controlling shareholders, shareholders, related parties, purchasers and the Company and others during or up to the reporting period are as follows: Whether it is Whether it performed Time and has a Background Type Covenanter Content in a term deadline for timely performance and strict way During the period from September 2006 to May 2007, the Company issued shares to Haier Group Corporation (“Haier Group”) to purchase the controlling equity in its four subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青 27 岛海尔空调电子有限公司), Hefei Haier Air-conditioning Co., Eliminate the Septem Undertaking related to Haier Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics property right ber significant assets Group Co., Ltd. ( 武 汉 海 尔 电 器 股 份 有 限 公 司 ), Guizhou Haier YES YES defects in 2006, reorganization Corporation Electronics Co., Ltd. (贵州海尔电器有限公司). With regard to land and etc. long the land and property required in the operation of Qingdao Haier term Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限公 司) , Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器 有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股 份 有 限 公 司 ) (the “Covenantees”), Haier Group made an 12 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. undertaking (the “2006 Undertaking”). According to the content of 2006 Undertaking and current condition of each Covenantee, Haier Group will constantly assure that Covenantees will lease the land and property owned by Haier Group for free. Haier Group will make compensation in the event that the Covenantees suffer loss due to the unavailability of such land and property. Haier Group Corporation undertakes that it will assure Qingdao Haier and its subsidiaries of the constant, stable and unobstructed use of the leased property. In the event that Qingdao Haier or any of its subsidiaries suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all reasonable and practicable measures to support the impaired party to recover to normal operation before the occurrence of loss. Upon the expiration of Eliminate the 24 Haier relevant leasing period, Haier Group Corporation will grant or take Undertaking related to property right December Group practicable measures to assure Qingdao Haier and its subsidiaries YES YES refinancing defects in 2013, long Corporation of priority to continue to lease the property at a price not higher land and etc. term than the rent in comparable market at that time. Haier Group Corporation will assure Qingdao Haier and its subsidiaries of the constant, stable, free and unobstructed use of self-built property and land of the Group. In the event that Qingdao Haier or any of its subsidiaries fails to continue to use self-built property according to its own will or in original way due to the fact that self-built property has no relevant ownership certificate, Haier Group Corporation will take all reasonable and practicable measures to eliminate obstruction and impact, or will support 13 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Qingdao Haier or its affected subsidiary to obtain alternative property as soon as possible, if Haier Group Corporation anticipates it is unable to cope with or eliminate the external obstruction and impact with its reasonable effort. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. The Company undertakes that it will eliminate the property defects of the Company and main subsidiaries within five years with reasonable business effort since 24 December 2013, so as to achieve the legality and compliance of the Company and main Eliminate the subsidiaries in terms of land and property. For details, please refer 24 Qingdao property right to the Announcement of Qingdao Haier Co., Ltd. on the December Haier Co., YES YES defects in Formation, Current Situation of the Defective Property, the 2013, five Ltd. land and etc. Influence on Operation of Issuer Caused by Uncertainty of years Ownership, Solution for the Defect and Guarantee Measures (L 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. With regard to its Share Option Incentive Scheme, the Company Undertaking related to Qingdao 11 April has undertaken not to provide loan or any other kind of financial the share option Other Haier Co., 2014, long YES YES support to incentive object in exercising option under the Share incentive Ltd. term Option Incentive Scheme or purchase of restricted shares, 14 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. including providing guarantee for its loan. Inject the assets of Fisher&Paykel to the Company or dispose such assets through other ways according to the requirements of the Haier domestic supervision before June 2020. For more details, please May Asset Group refer to the Announcement of Qingdao Haier Co., Ltd. on the 2015-June YES YES injection Corporation Changes of Funding Commitment of Haier Group Corporation (L 2020 2015-015) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 26 May 2015. Inject the assets of Haier Photoelectric to the Company or dispose such assets through other ways according to the requirements of the domestic supervision before June 2020. For more details, Haier December Asset please refer to the Announcement of Qingdao Haier Co., Ltd. on Group 2015-June YES YES Other undertakings injection the Changes of Funding Commitment of Haier Group Corporation Corporation 2020 made to the medium (L 2015-063) published on the four major securities newspapers and minority and the website of Shanghai Stock Exchange on 23 December shareholders 2015. In December 2015 and January 2016, the meeting of the Board of Directors and general meeting of the shareholders considered and approved the matters in relation to the acquisition of minority equity interest of Mitsubishi Heavy Industries Haier and Carrier December Profit Haier Refrigeration Equipment held by Haier Group. The Company 2015- forecast and Group signed the Profit Compensation Agreement with Haier Group to YES YES December compensation Corporation forecast the profits achieved by the aforementioned two companies 2018 in 2015 - 2018. If the profits are not reached during the commitment period, the difference part will be made up to the Company by Haier Group in cash. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition 15 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Related-party Transaction (L 2015-062) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015. 16 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 3.4 Warning and explanation on reasons for accumulated net profit for the period from the beginning of the year to the end of the next reporting period to be at a loss or expected to have material change as compared to those of the same period of last year Applicable √Not Applicable Name of Qingdao Haier Co., Ltd. company Legal Liang Haishan representatives Date 30 October 2017 17 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. IV. Appendix 4.1 Financial Statements Consolidated Balance Sheet 30 September 2017 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Closing balance Opening balance Current Assets: Monetary Capital 32,161,405,575.63 23,582,239,011.20 Clearing settlement funds Placements with banks Financial assets measured at fair value and changes of which included in current 23,099,285.52 80,432,384.17 profit and loss Derivative financial assets Bills receivables 13,613,608,437.38 13,796,561,238.05 Accounts receivables 14,080,769,417.93 12,265,195,443.40 Prepayments 636,516,972.75 592,510,116.61 Premiums receivable Reinsurance accounts receivables Reinsurance contract reserves receivable Interests receivables 197,782,711.00 135,319,774.41 Dividends receivables 4,524,472.84 101,648,913.10 Other receivables 1,162,772,967.81 1,180,418,052.75 Financial assets purchased under resale agreements Inventories 16,662,708,886.43 15,284,904,331.04 Assets classified as held for sale Non-current assets due within one year Other current assets 3,492,482,010.38 2,657,462,188.89 Total current assets 82,035,670,737.67 69,676,691,453.62 18 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Non-current assets: Loans and advances granted Available-for-sale financial assets 1,529,297,430.03 1,555,878,717.05 Held-to-maturity investments Long-term receivables Long-term equity investments 12,199,579,035.51 11,057,819,628.14 Investment properties 31,829,109.66 34,600,393.37 Fixed assets 15,467,940,420.30 15,592,013,177.13 Construction in progress 1,938,163,487.98 1,769,875,050.35 Construction materials Disposals of fixed assets 55,839,366.07 55,808,808.81 Biological assets for production Fuel assets Intangible assets 7,005,667,558.19 7,242,818,792.38 Development expenses 964,265,409.64 913,283,796.32 Goodwill 20,118,185,407.90 21,004,123,145.39 Long-term amortization expenditures 80,576,820.58 115,773,592.78 Deferred income tax assets 1,929,302,431.06 1,592,009,404.59 Other non-current assets 1,092,341,805.99 858,461,388.86 Total non-current assets 62,412,988,282.91 61,792,465,895.17 Total assets 144,448,659,020.58 131,469,157,348.79 Current liabilities: Short-term borrowings 12,418,891,006.63 18,165,531,879.15 Borrowings from central bank Absorbing deposit and deposit in inter-bank market Placements from banks Financial liabilities measured at fair value and changes of which included in current 1,113,469.99 2,340,213.20 profit and loss Derivative financial liabilities Bills payable 16,103,545,239.34 12,404,889,760.05 Accounts payables 24,883,347,557.94 20,601,681,120.03 Payments received in advance 5,699,883,655.56 5,737,348,712.97 Disposal of repurchased financial assets Handling charges and commissions payable Staff remuneration payable 2,034,170,759.85 2,408,525,656.48 Taxes payable 1,821,564,136.55 1,620,588,401.27 Interests payable 199,296,599.98 30,570,328.66 Dividends payable 171,494,413.64 148,690,489.01 19 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Other payables 11,188,265,516.60 9,459,636,746.05 Reinsurance accounts payable Deposits for insurance contracts Customer deposits for trading in securities Amounts due to issuer for securities underwriting Liabilities classified as held for sale Non-current liabilities due within one 1,659,225,902.64 2,966,808,509.55 year Other current liabilities 12,730,995.55 17,228,645.29 Total current liabilities 76,193,529,254.27 73,563,840,461.71 Non-current liabilities: Long-term borrowings 19,300,470,189.58 15,530,801,311.80 Debentures payable Including: preference Shares Perpetual bonds Long-term payable 113,567,759.83 115,783,382.28 Long-term payables for staff’s 892,334,688.34 1,209,218,564.79 remuneration Special payable Estimated liabilities 3,232,008,708.04 2,310,119,430.60 Deferred income 394,639,154.50 342,825,593.35 Deferred income tax liabilities 158,956,064.31 133,243,146.68 Other non-current liabilities 159,823,992.08 582,785,069.86 Total non-current liabilities 24,251,800,556.68 20,224,776,499.36 Total liabilities 100,445,329,810.95 93,788,616,961.07 Owners’ equity Share capital 6,097,402,727.00 6,097,630,727.00 Other equity instruments Including: preference shares Perpetual bonds Capital reserve 83,462,866.62 106,798,262.17 Less: Treasury stock 1,041,960.00 Other comprehensive income 268,226,696.49 566,987,435.57 Special reserve Surplus reserve 2,065,911,217.00 2,074,118,571.01 General risk provisions Undistributed profits 21,690,034,846.09 17,593,695,190.81 Total equity attributable to owners of the 30,205,038,353.20 26,438,188,226.56 parent company Minority interests 13,798,290,856.43 11,242,352,161.16 20 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Total owners’ equity 44,003,329,209.63 37,680,540,387.72 Total liabilities and owners’ equities 144,448,659,020.58 131,469,157,348.79 Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) Balance Sheet of the Parent Company 30 September 2017 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Closing balance Opening balance Current Assets: Monetary Capital 4,563,406,578.43 3,888,623,400.28 Financial assets measured at fair value and changes of which included in current profit and loss Derivative financial assets Bills receivables Accounts receivables 211,862,728.36 265,438,220.39 Prepayments 40,174,115.51 10,000,000.00 Interests receivables 186,711,026.24 85,452,583.16 Dividends receivables 200,000.00 329,713,897.32 Other receivables 38,971,830.93 322,953,279.90 Inventories 38,472,023.53 69,799,065.47 Assets classified as held for sale Non-current assets due within one year Other current assets 165,012,831.51 94,935,174.83 Total current assets 5,244,811,134.51 5,066,915,621.35 Non-current assets: Available-for-sale financial assets 5,978,414.52 5,478,235.84 Held-to-maturity investments Long-term receivables 8,600,000,000.00 8,600,000,000.00 Long-term equity investments 23,068,844,965.51 22,342,078,877.07 Investment properties Fixed assets 122,757,304.80 116,840,195.32 Construction in progress 16,806,600.17 22,611,979.50 Construction materials Disposals of fixed assets 21 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Biological assets for production Fuel assets Intangible assets 7,953,498.86 8,578,922.84 Development expenses Goodwill Long-term amortization expenditures Deferred income tax assets 62,346,256.82 62,346,256.82 Other non-current assets Total non-current assets 31,884,687,040.68 31,157,934,467.39 Total assets 37,129,498,175.19 36,224,850,088.74 Current liabilities: Short-term borrowings Financial liabilities measured at fair value and changes of which included in current profit and loss Derivative financial liabilities Bills payable Accounts payables 302,548,109.26 1,142,008,704.07 Payments received in advance 633,678,127.81 1,844,082,827.50 Staff remuneration payable 33,607,763.18 39,919,748.55 Taxes payable 12,712,709.52 57,218,867.86 Interests payable 93,254,821.05 117,705,327.18 Dividends payable Other payables 25,394,674,517.86 21,170,550,089.69 Liabilities classified as held for sale Non-current liabilities due within one year Other current liabilities 10,402,345.83 4,841,867.91 Total current liabilities 26,480,878,394.51 24,376,327,432.76 Non-current liabilities: Long-term borrowings Debentures payable Including: preference shares Perpetual bonds Long-term payable 20,000,000.00 20,000,000.00 Long-term payables for staff’s remuneration Special payable Estimated liabilities Deferred income 27,700,000.00 17,700,000.00 Deferred income tax liabilities 15,644,327.91 15,569,301.11 22 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Other non-current liabilities Total non-current liabilities 63,344,327.91 53,269,301.11 Total liabilities 26,544,222,722.42 24,429,596,733.87 Owners’ equity: Share capital 6,097,402,727.00 6,097,630,727.00 Other equity instruments Including: preference shares Perpetual bonds Capital reserve 2,060,812,960.17 2,061,597,739.78 Less: Treasury stock 1,041,960.00 Other comprehensive income -24,405,467.75 -10,881,603.15 Special reserve Surplus reserve 1,389,846,284.51 1,389,846,284.51 Undistributed profits 1,061,618,948.84 2,258,102,166.73 Total owners’ equity 10,585,275,452.77 11,795,253,354.87 Total liabilities and owners’ equities 37,129,498,175.19 36,224,850,088.74 Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) Consolidated Income Statement January-September 2017 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Amount as at the Amount as at the beginning of the beginning of last year to the end of year to the end of Current amount Prior amount the reporting the reporting Items (July-September) (July-September) period period (January-Septemb (January-Septem er) ber) I. Total operating 41,613,863,654.10 35,580,735,659.68 119,189,613,634.20 84,367,342,584.55 revenue Including: operating 41,613,863,654.10 35,580,735,659.68 119,189,613,634.20 84,367,342,584.55 revenue Interest income Insurance premiums earned 23 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Fee and commission income II. Total cost of 40,468,513,665.59 34,713,999,575.68 113,364,284,425.92 80,118,843,110.38 operations Including: operating 29,397,273,551.20 25,171,204,780.30 83,552,179,384.59 59,846,936,854.72 cost Interest expenses Fee and commission expenses Insurance withdrawal payment Net payment from indemnity Net provisions for insurance contract Insurance policy dividend paid Reinsurance cost Business taxes and 269,212,903.89 117,023,348.43 614,599,237.19 288,720,266.70 surcharge Selling expenses 8,086,931,744.23 6,671,957,919.30 21,024,447,698.61 13,365,034,255.10 Administrative 2,324,987,511.75 2,634,371,111.57 6,948,695,908.26 6,177,453,643.25 expenses Financial expenses 378,794,177.81 144,920,254.93 990,471,459.74 269,989,263.40 Loss in assets 11,313,776.71 -25,477,838.85 233,890,737.53 170,708,827.21 impairment Add: income from change in fair value 114,188,419.25 78,690,919.90 526,252,264.40 -103,567,238.94 (losses are represented by “-”) Investment income (losses are 318,580,844.17 308,359,351.21 972,423,558.52 1,337,553,151.05 represented by “-”) Including: investment income of associates and joint ventures Exchange gain (losses are represented by “-”) Other incomes 191,577,886.70 264,319,732.74 III. Operating profit (losses are 1,769,697,138.63 1,253,786,355.11 7,588,324,763.94 5,482,485,386.28 represented by “-”) 24 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Add: non-operating 314,205,463.92 129,603,563.04 623,209,532.54 589,928,436.18 income Including: gain from disposal of non-current assets Less: non-operating 39,369,015.51 234,988,996.29 123,948,038.66 291,472,316.41 expenses Including: Loss from disposal of non-current assets IV. Total profit (total losses are represented 2,044,533,587.04 1,148,400,921.86 8,087,586,257.82 5,780,941,506.05 by “-”) Less: income tax 218,094,249.60 202,370,445.05 976,116,407.83 863,068,827.03 expense V. Net profit (net losses are represented 1,826,439,337.44 946,030,476.81 7,111,469,849.99 4,917,872,679.02 by “-”) Net profit attributable to owners 1,255,293,313.13 511,810,975.12 5,682,361,717.64 3,826,984,146.82 of the Company Profit or loss attributable to 571,146,024.31 434,219,501.69 1,429,108,132.35 1,090,888,532.20 minority shareholders VI. Other comprehensive -144,121,187.22 318,820,472.39 -345,254,600.46 -57,829,623.37 income, net of tax Other comprehensive income attributable to -130,145,366.38 316,020,122.26 -298,760,739.08 -70,651,292.41 owners of the Company, net of tax (I) Other comprehensive income that will not be reclassified subsequently to profit or loss 1. Changes in net liabilities or net assets arising from re-measurement of 25 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. defined benefit plans 2. Share of other comprehensive income of investees that cannot be reclassified to profit or loss under equity method (II) Other comprehensive income to be -130,145,366.38 316,020,122.26 -298,760,739.08 -70,651,292.41 reclassified subsequently to profit or loss 1. Share of other comprehensive income of investees that will be 40,693,511.60 10,147,015.47 -81,346,664.65 -34,869,817.75 reclassified subsequently to profit or loss under equity method 2. Gain or loss from change in fair value 2,843,778.27 -1,569,310.30 496,754.29 -449,875,102.32 of available-for-sale financial assets 3. Gain or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets 4. Effective portion of gain or loss arising 4,628,209.01 -1,139,401.61 from cash flow hedging instruments 5. Exchange differences on translation of -178,310,865.26 307,442,417.09 -216,771,427.11 414,093,627.66 financial statements denominated in foreign currencies 6. Other 26 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Other comprehensive income attributable to -13,975,820.84 2,800,350.13 -46,493,861.38 12,821,669.04 minority shareholders, net of tax VII. Total comprehensive 1,682,318,150.22 1,264,850,949.20 6,766,215,249.53 4,860,043,055.65 income Total comprehensive income attributable to 1,125,147,946.75 827,831,097.38 5,383,600,978.56 3,756,332,854.41 the shareholders of parent company Total comprehensive income attributable to 557,170,203.47 437,019,851.82 1,382,614,270.97 1,103,710,201.24 the minority shareholders VIII . Earnings per share: (I) Basic earnings per share 0.206 0.084 0.932 0.627 (RMB/share) (II) Diluted earnings per share 0.206 0.084 0.932 0.627 (RMB/share) The net profit realized by the acquiree prior to its merger with the Company, which turned the acquiree into a jointly controlled entity of the Company, was RMB 500,041.82 during the period. Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) Income Statement of the Parent Company January-September 2017 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited 27 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Amount as at Amount as at the beginning of the beginning of the year to the last Current Prior amount end of year to the end amount Items (July-Septemb the reporting of the (July-Septemb er) period reporting er) (January-Septe period mber) (January-Septe mber) I. Operating revenue 885,928,248.69 827,929,968.02 2,429,040,574.34 2,343,801,453.23 Less: Operation cost 599,578,352.66 599,133,201.64 1,724,678,093.73 1,663,108,069.07 Taxes and surcharge 8,873,954.31 2,251,251.96 17,998,106.78 8,696,651.40 Selling expenses 65,814,107.53 30,872,977.31 150,349,127.54 172,551,891.19 Administrative expenses 205,554,320.29 202,054,309.20 497,356,040.18 424,068,353.18 Financial expenses 32,401,366.94 13,315,728.36 77,833,579.73 13,236,150.33 Loss in assets impairment -67,084,496.59 -1,722,245.56 -17,843,951.04 -3,616,902.23 Add: income from change in fair value (losses are represented by “-”) Investment income (losses 108,081,882.92 56,992,467.02 259,975,650.65 200,457,104.98 are represented by “-”) Including: investment income of associates and joint ventures Other incomes 17,166,899.75 17,166,899.75 II. Operating profit (losses are 166,039,426.22 39,017,212.13 255,812,127.82 266,214,345.27 represented by “-”) Add: non-operating income 7,140,206.67 5,619,768.40 59,966,161.35 81,560,399.04 Including: gain from disposal of non-current assets Less: non-operating expenses 852,535.19 891,618.63 861,948.86 911,949.33 Including: Loss from disposal of non-current assets III. Total Profit (losses are 172,327,097.70 43,745,361.90 314,916,340.31 346,862,794.98 represented by “-”) Less: income tax expense 9,633,872.86 -1,987,065.76 -756,318.10 5,807,852.78 IV. Net Profit (net losses are 162,693,224.84 45,732,427.66 315,672,658.41 341,054,942.20 represented by “-”) V. Other comprehensive income, 79,633.31 6,110,062.02 -13,523,864.60 -14,597,453.12 net of tax (I) Other comprehensive income will not be reclassified subsequently to profit or loss 28 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. 1. Changes in net liabilities or net assets arising from re-measurement of defined benefit plans 2. Share of other comprehensive income of investees that cannot be reclassified to profit or loss under equity method (II) Other comprehensive income to be reclassified 79,633.31 6,110,062.02 -13,523,864.60 -14,597,453.12 subsequently to profit or loss 1. Share of other comprehensive income of investees that will be reclassified 14,374,168.36 6,169,709.37 425,151.88 915,175.04 subsequently to profit or loss under equity method 2. Gain or loss from change in fair value of available-for-sale -14,294,535.05 -59,647.35 -13,949,016.48 -15,512,628.16 financial assets 3. Gain or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets 4. Effective portion of gain or loss arising from cash flow hedging instruments 5. Exchange differences on translation of financial statements denominated in foreign currencies 6. Other VI. Total comprehensive income 162,772,858.15 51,842,489.68 302,148,793.81 326,457,489.08 VII. Earnings per share: (I) Basic earnings per share (RMB/ share) (II) Diluted earnings per share (RMB/share) Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) Consolidated Cash Flow Statement January-September 2017 Prepared by: Qingdao Haier Co., Ltd. 29 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Amount as at the Amount as at the beginning of beginning of last Items the year to the end of year to the end of the the reporting period reporting period (January-September) (January-September) I. Cash flows from operating activities: Cash received from the sale of goods and 139,498,787,397.46 90,110,978,075.44 rendering of services Net increase in customer and interbank deposits Net increase in borrowing from PBOC Net cash increase in borrowing from other financial institutes Cash received from premiums under original insurance contract Net cash received from reinsurance business Net increase in deposits of policy holders and investment Net increase from the disposal of financial assets measured at fair value and changes of which included in current profit and loss Cash paid for interest, bank charges and commissions Net increase in cash borrowed Net increase in cash received from repurchase operation Refunds of taxes 933,453,763.81 499,360,330.52 Cash received from other related 641,640,968.26 671,981,686.17 operating activities Sub-total of cash inflows from 141,073,882,129.53 91,282,320,092.13 operating activities Cash paid on purchase of goods and 99,997,320,327.27 64,518,763,975.56 services Net increase in loans and advances Net increase in deposits in PBOC and interbank Cash paid for compensation payments under original insurance contract 30 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Cash paid for interest, bank charges and commissions Cash paid for insurance policy dividend Cash paid to and on behalf of employees 11,219,814,215.75 7,808,375,565.15 Cash paid for all types of taxes 5,736,748,757.22 5,149,863,599.32 Cash paid to other operation related 9,959,945,830.35 8,859,372,397.16 activities Sub-total of cash outflows from 126,913,829,130.59 86,336,375,537.19 operating activities Net cash flows from operating 14,160,052,998.94 4,945,944,554.94 activities II. Cash flows from investing activities: Cash received from disposal of 52,073,162.58 580,469,201.21 investments Cash received from return on 240,271,551.96 132,888,904.12 investments Net cash received from the disposal of fixed assets, intangible assets and other 44,493,426.47 26,085,548.94 long term assets Net cash received from disposal of 155,037,270.54 subsidiaries and other operating entities Cash received from other investment 3,693,847.50 related activities Sub-total of cash inflows from 491,875,411.55 743,137,501.77 investing activities Cash paid on purchase of fixed assets, intangible assets and other long term 2,614,123,880.97 2,050,472,227.16 assets Cash paid for investments 2,597,591,667.47 1,201,539,611.53 Net increase in secured loans Net cash paid on acquisition of 88,429,231.46 36,398,588,501.66 subsidiaries and other operating entities Cash paid on other investment related 3,861,165.47 activities Sub-total of cash outflows from 5,300,144,779.90 39,654,461,505.82 investing activities Net cash flows from investing -4,808,269,368.35 -38,911,324,004.05 activities III. Cash flows from financing activities: Cash received from investment 1,347,292,085.10 10,839,764.43 Including: cash received by subsidiaries from minority shareholders’ investment 31 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Cash received from borrowings 16,802,698,248.06 37,147,302,314.09 Cash received from issuing bonds Cash received from other financing 1,731,609.42 related activities Sub-total of cash inflows from 18,151,721,942.58 37,158,142,078.52 financing activities Cash paid on repayment of borrowings 16,985,670,538.25 6,080,035,623.81 Cash paid on distribution of dividends, 2,010,741,534.99 1,767,259,255.68 profits, or interest expenses Including: dividend, profit paid to minority shareholders by subsidiaries Cash paid on other financing activities 47,799,254.84 168,740,536.91 Sub-total of cash outflows from 19,044,211,328.08 8,016,035,416.40 financing activities Net cash flows from financing -892,489,385.50 29,142,106,662.12 activities IV. Effect of fluctuations in exchange -184,484,131.52 -56,520,198.96 rates on cash and cash equivalents V. Net increase in cash and cash 8,274,810,113.57 -4,879,792,985.95 equivalents Add: balance of cash and cash 23,510,900,890.49 24,725,880,770.59 equivalents at the beginning of the period VI. Balance of cash and cash equivalents 31,785,711,004.06 19,846,087,784.64 at the end of the period Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) Cash Flow Statement of the Parent Company January-September 2017 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Amount as at the Amount as at the beginning of beginning of last Items the year to the end of year to the end of the the reporting period reporting period (January-September) (January-September) I. Cash flows from operating activities: Cash received from the sale of goods 427,739,667.35 314,712,571.18 and rendering of services Refunds of taxes 55,711,962.27 12,451,222.14 32 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Cash received from other related 54,115,058.79 46,880,078.85 operating activities Sub-total of cash inflows from 537,566,688.41 374,043,872.17 operating activities Cash paid on purchase of goods and 1,452,092,842.51 431,718,199.28 services Cash paid to and on behalf of employees 564,703,136.34 241,922,703.85 Cash paid for all types of taxes 137,011,406.78 116,783,336.85 Cash paid to other operation related 321,211,786.90 422,365,565.20 activities Sub-total of cash outflows from 2,475,019,172.53 1,212,789,805.18 operating activities Net cash flows from operating -1,937,452,484.12 -838,745,933.01 activities II. Cash flows from investing activities: Cash received from disposal of investments Cash received from return on 429,548,610.50 249,905,293.86 investments Net cash received from the disposal of fixed assets, intangible assets and other long term assets Net cash received from disposal of subsidiaries and other operating entities Cash received from other investment related activities Sub-total of cash inflows from 429,548,610.50 249,905,293.86 investing activities Cash paid on purchase of fixed assets, intangible assets and other long term 28,348,785.40 8,959,725.03 assets Cash paid for investments 793,311,762.50 15,748,337,507.50 Net cash paid on acquisition of subsidiaries and other operating entities Cash paid on other investment related activities Sub-total of cash outflows from 821,660,547.90 15,757,297,232.53 investing activities Net cash flows from investing -392,111,937.40 -15,507,391,938.67 activities III. Cash flows from financing activities: Cash received from investment Cash received from borrowings 33 / 34 Third Quarterly Report of 2017 Qingdao Haier Co., Ltd. Cash received from issuing bonds Cash received from other financing 4,517,547,537.12 20,809,717,585.98 related activities Sub-total of cash inflows from 4,517,547,537.12 20,809,717,585.98 financing activities Cash paid on repayment of borrowings Cash paid on distribution of dividends, 1,512,155,876.29 1,279,850,811.18 profits, or interest expenses Cash paid on other financing activities 1,041,960.00 139,903,557.84 Sub-total of cash outflows from 1,513,197,836.29 1,419,754,369.02 financing activities Net cash flows from financing 3,004,349,700.83 19,389,963,216.96 activities IV. Effect of fluctuations in exchange -2,101.16 rates on cash and cash equivalents V. Net increase in cash and cash 674,783,178.15 3,043,825,345.28 equivalents Add: balance of cash and cash 3,888,623,400.28 562,827,007.96 equivalents at the beginning of the period VI. Balance of cash and cash equivalents 4,563,406,578.43 3,606,652,353.24 at the end of the period Legal representative: Liang Haishan Chief accountant: Gong Wei Person in charge of accounting department: Ying Ke (应珂) 4.2 Audit Report □Applicable √Not Applicable 34 / 34